Our post last month titled Of Whiskey and Martha’s Vineyard Realty: Federal Receivership Ordered for Fast Growing Uncle Nearest Brand discussed a federal court’s decision to grant a lender’s motion for the appointment of a receiver for its borrower. Set forth below are: (i) brief updates on developments in the Uncle Nearest case; and (ii) discussion of a recently issued Third Circuit decision in the completely unrelated matter of Whittaker Clark & Daniels Inc. dealing with the power of a corporate board to commence bankruptcy after the appointment of a state court ... Continue Reading
Companies facing financial difficulties often utilize Chapter 11 to help effectuate a restructuring or sale as part of a case filed in the United States Bankruptcy Court. In other instances, a company’s lender – impatient with a company’s efforts to respond to financial challenges – may apply to a United States District Court for appointment of a federal receiver for the company.
The appointment of a federal receiver is an extraordinary remedy allowed only after a judicial finding that such a step is clearly necessary to protect a lender’s interest in its collateral. Continue Reading
Lenders and other creditors often obtain consent judgment liens against an individual guarantor’s residence as additional security during or after commercial foreclosure proceedings against real estate or other assets owned by an affiliated corporate borrower. Is this type of consensual lien against a guarantor’s home at risk if the guarantor later files for protection under Chapter 7 of the U.S. Bankruptcy Code (Bankruptcy Code) and seeks to set aside or avoid the lien because it impairs the guarantor’s homestead exemption? The answer is yes according to most, but not ... Continue Reading